Coachella's Hometown Aims To Cash In On Fest's Rising Tide

Like many California cities hit hard by the real estate crash, Indio (near Palm Springs) has been forced to make steep cutbacks to avoid bankruptcy. But unlike other cities, Indio hosts the highest-grossing music festival in the world — Coachella — which wraps up this weekend. It has made city leaders eager to capitalize on Coachella's riches.

Sam Torres, plumber by day, Indio city councilman by night, says he was prepared to become the most hated man in the city, and he very well may have achieved that goal. His offense? Proposing a 6 percent tax on Coachella tickets.

"I didn't look at these guys as the first source of money to buy sofas for City Hall," he says. "I looked at these guys as a way to maintain our city."

Sipping a beer on the polo fields where the festival is held, Torres says he looks at Coachella with a mix of awe and envy. When promoter Goldenvoice started the festival in 1999, it nearly went bankrupt. Musicians worried whether they would get paid. At the same time, Indio was prospering in the housing boom. Now their fortunes have reversed.

Even though they cost a minimum of $349 dollars, all of Coachella's tickets get snapped up as soon as they go on sale. Roughly 160,000 people come to the desert to see acts like the Yeah Yeahs Yeahs, the Red Hot Chili Peppers and the Wu-Tang Clan.

"We had to step up this plate like a business," says Torres. "Everyone says government has to be more like business. When a government acts like a business, everyone says 'What's wrong you?' You're supposed to be like Mother Teresa and sponsor these events and get nothing in return."

Goldenvoice is known for its secrecy, and for this story it declined to comment. As we were leaving the polo fields, four security guards walked over and told us to leave.

"You can't have any recording equipment here," one of them said. "You gotta go."

The ticket tax got an even more unwelcome reception. Torres' fellow city council members wouldn't even bring the proposal to a vote last summer. When Torres said he would take the ticket tax directly to voters, Coachella threatened to leave Indio. Panic ensued, and Torres backed down.

One of the biggest opponents to the ticket tax was Elaine Holmes, who's now Indio's mayor.

"Granted, budget shortfalls are an issue for many cities," she says. "We work through it. I'm a small business person, so to add tax is not where I wanted to go, particularly since Goldenvoice is very generous to what they provide the city."

A Goldenvoice-commissioned study showed the festival pumps more than $90 million into Indio's economy. And though it's far less than Torres wanted, Indio is getting an increasing cut of every Coachella ticket sold. This year and last, the city received $2.33 on every ticket, which works out to about $500,000 — no small chunk of change for a city with a $49 million annual budget — and the fee is set to double starting next year, under an agreement the city approved earlier this month that keeps the festival in Indio until at least 2030, adds two fall festivals and expands the festival's capacity.

"This is a several-block area that is expanding now with local arts and culture and hopefully a few restaurants," says Mayor Holmes, standing near a deserted main street. She says the long-term economic boost of hosting Coachella — not an expensive ticket tax — is what her city needs.

It's a work in progress. "Certainly," says Holmes, "it's putting Indio on the map." Holmes also says you can't put a price on the tourism cachet Coachella brings Indio. The city will soon get its first new hotel in nearly three decades.

One community in California has turned music for its renewal. Indio, near Palm Springs was hit hard by the real estate crash. The city made steep budget cuts to avoid bankruptcy. Indio also happens to host the highest-grossing music festival in the world - Coachella - which wraps up this weekend.

In today's Business Bottom Line, Ben Bergman from member station KPCC, reports on the city's efforts to benefit from a music festival's riches.

BEN BERGMAN, BYLINE: Plumber by day, Indio city councilman by night, Sam Torres says he was prepared to become the most hated man in the city, and he very well may have achieved that goal. His offense? Proposing a six percent tax on Coachella tickets.

SAM TORRES: I didn't look at these guys at the first place to go in order to buy new sofas for the city hall. I looked at these guys as a way to help us continue to maintain our city.

BERGMAN: Sipping a beer on the polo fields where the festival is held, Torres says he looks at Coachella with a mix of awe and envy. When promoter Goldenvoice started the festival in 1999, it nearly went bankrupt. Musicians worried if they would get paid. At the same time, Indio was prospering in the housing boom. Now their fortunes have reversed.

UNIDENTIFIED WOMAN: Coachella! Coachella!

(APPLAUSE)

BERGMAN: Even though they cost a minimum of $349, all of Coachella's tickets get snapped up as soon as they go sale.

TORRES: Everyone says government has to be more like business. When a government acts like a business, they look at us like, what's wrong with you guys? You're supposed to be like Mother Teresa and just sponsor these things and expect nothing in return.

BERGMAN: Goldenvoice is known for its secrecy, and for this story they refused any comment. As we were leaving the polo fields, four security guards walked over and told us to leave.

UNIDENTIFIED MAN #2: You can't have any recording equipment. I know you're recording right now. You gotta go.

BERGMAN: The ticket tax got an even more unwelcome reception. Torres's fellow city council members wouldn't even bring the proposal to a vote. When Torres said he would take the ticket tax directly voters, Coachella threatened to leave Indio. Panic ensued, and Torres backed down.

One of the biggest opponents was Elaine Holmes, who's now Indio's mayor.

MAYOR ELAINE HOLMES: Granted, budget shortfalls are an issue for many cities. We work through it. I'm a small business person, so to add tax to something, to me, is just really not where I wanted to go, particularly because Goldenvoice is very, very generous in what they provide the city.

BERGMAN: A Goldenvoice-commissioned study showed it pumps more than $90 million into Indio's economy. And though it's far less than Torres wanted, starting next year the city will collect a $5 fee on every ticket - about a million dollars a year. It's part of a new agreement that keeps Coachella in Indio until at least 2030.

HOLMES: This is just a several block area that is expanding now with local artisan culture and hopefully a few more restaurants.

BERGMAN: Standing near a deserted Main Street, Mayor Holmes says the long-term economic boost of hosting Coachella is more valuable than a big ticket tax.

HOLMES: It's definitely a work in progress. It's kind of fun.

BERGMAN: And I mean, is it fair to say you hope, you know, the Coachella will sort of be the spark that revitalizes this area we're looking at here?

HOLMES: Certainly, I think from the standpoint of the number of people, it's putting Indio on the map.

BERGMAN: The city will soon get its first new hotel in nearly three decades.